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OnStar, a unit of General Motors, aims to be a leader in the use of Near Field Communication technology for automotive-related payments.

Currently, auto makers use NFC chips primarily to aid in navigation or to play music. OnStar is experimenting with an NFC mobile payment app for use at public charging stations for electric vehicles.

Motorists using OnStar's Park-Tap-Charge system link a bank account to the smartphone app, which can then be tapped at charging stations with NFC tags embedded. The app, which is not yet available to all consumers, detects how much time it will take to reach a full charge and allows users to see the cost of fully charging the vehicle before they accept payment. It sends alerts to users when their vehicles are done charging.

Paul Pebbles

This system can cut down on the time spent at charging stations by eliminating the need to enter payment details and other personal information. The app eliminates those steps by downloading information about the car and its driver from the cloud.

“NFC is likely to be a broader application in the future,” says Paul Pebbles, global manager of smart grid and electric vehicle services with OnStar. “It’s a really easy tool to use to associate a vehicle to other things out in the world.”

OnStar has been using electric cars to showcase its new technology. Approximately 30,000 GM electric cars are in use today, he says.

The automotive industry is still trying to figure out how to equip its vehicles for the future, but no clear trend exists, Pebbles says.

OnStar’s idea holds potential, but if the company hopes to expand the payment app to gas stations, it might encounter obstacles, says Dave Kaminsky, an analyst at Mercator Advisory Group.

“Gas station payment systems are notoriously very difficult for being able to provide any kind of update,” he says.

This difficulty is reflected in the different standard gas stations face in the U.S. transition to the EMV chip-card standard. The card networks urge most merchants to update their payment terminals by October, 2015 to accept EMV card payments, but they allow gas stations an extra two years.

Payment systems will soon be integrated within vehicles, Kaminsky says, and contactless payment systems for mass transportation are increasingly popular. The biggest developments are in parking payments, he says.

Consumers can easily and more conveniently pay for parking with their mobile devices today, Kaminsky says. Plus these apps could allow consumers to check time before expiration at the meter and send alerts based on time limits.

NFC payments should not be thought of as only a replacement to cards and cash, but also as a way to “customize the entire experience tailored to a specific person and location,” says Jagdish Rebello, director of consumer and communications at IHS iSuppli, a research firm based in California.

NFC technology allows merchants to send ads and coupons based on a user's location, for example.

“People always have their cellphones in their car,” Rebello says. "[OnStar] is looking at making the handset a gateway into the car,” not only to provide targeted marketing opportunities but also to push the building of an ecosystem with infrastructure to support NFC.

NFC could become useful as a payment method in conjunction with a vehicle’s navigation system, Kaminsky says.

BMW built an NFC-enabled car key that not only unlocks the car but also connects to a vehicle’s navigation system to show drivers the location of nearby hotels. As NFC mobile payment acceptance grows, linking the actual reservation and payment to the car’s navigation system would be the next step, Kaminsky says.

“Soon you’ll be able to leave your keys, MP3 player and wallet at home,” he says. These things “will be replaced by your mobile device.”

BMW make similar predictions on its blog. Instead of applying these capabilities to mobile devices, BMW promotes the technology through the actual key.

In BMW's view of the future, hotel reservations and train tickets would be purchased in the car and downloaded to the car keys. The keys would then be presented to a clerk or conductor instead of a card.